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Stephen Olson to speak at upcoming workshop organized by the International Institute for Trade and Development on 

"Economics of GMS Agricultural trade in goods and services towards the world market"

Chiangmai, Thailand Sep 8-12.

Japan needs to seek out regional allies, view U.S. as ‘second resort,’ says head of think tank

From The Japan Times
December 9, 2015

Japan needs to stop relying on the U.S. for its defense and form a security alliance with other Asian nations if it is to become a respectable global leader in the decades to come, according to the founder and president of Washington-based think tank Economic Strategy Institute.

Clyde Prestowitz said U.S. defense budget cuts could mean a reduction in its presence in the Asia-Pacific region, where it is currently focusing its foreign policy.

In that scenario, Washington, with its own interests in mind, won’t be as reliable if and when a military conflict arises between Japan and China, said Prestowitz in an interview with The Japan Times last month.

“Japan should have mutual security treaties with South Korea, with India, with Vietnam” to compensate for a possible falling U.S. presence, he said, adding that Washington should be the “call of second resort.”

That is one of many recommendations he is making in his latest book “Japan Restored,” which will hit stores in Japan on Monday. A Japanese version is expected to be published next year.

Prestowitz argued that instead of taking the need for a defense partnership seriously, Prime Minister Shinzo Abe and South Korean President Park Gyun-hye are squabbling over the issue of “comfort women” — a sign that the two countries are accustomed to the U.S. military presence.

“U.S. presence relieves them of the responsibilities of thinking seriously about defense, national security and foreign policies,” he said. “If the U.S. wasn’t there, they couldn’t afford to do that.”

Prestowitz’s proposals range from economy to energy, education and labor.

He argues that Japan needs to switch to alternative energy such as solar, wind and methane hydrate, and create a smart-grid network to become an energy efficient nation. The country also needs to create a better environment to lure foreign entrepreneurs to launch startups here, he said, in addition to allowing more immigrants to make up for the declining workforce.

More day care facilities and preschools need to be built so mothers can go back to work, and Japanese need to be fluent in English to be globally competitive, Prestowitz said.

Prestowitz served as counselor to the secretary of commerce in the 1980s under the administration of U.S. President Ronald Reagan, negotiating with Japan on trade items ranging from cars to agricultural products and computer chips.

This was when Japan’s trade surplus with the United States was skyrocketing from some $10 billion in 1980 to $50 billion in 1985, creating a huge diplomatic rift between the two countries.

Prestowitz later left the government, founded his own think tank and published “Trading Places,” offering his insight on why Japan has become an economic powerhouse.

But since then, Japan has suffered the burst of the bubble economy, followed by decades of economic stagnation that continues today despite the efforts of Abenomics, experts said.

When Prestowitz started working on a project to compare the South Korean and Japanese auto industries in 2011, he said he was shocked to see how the global competitiveness of Japan’s industries have declined.

“This is not the Japan I used to know,” said Prestowitz. “Japan is slowly committing suicide as a country.”

However, he said Tokyo can change, given its experience of going through radical transitions — first during the Meiji Restoration and next after it was defeated in World War II.

“We know Japan is capable,” he said, but added that it may only be possible under extreme circumstances.

In his book he illustrates excessive scenarios in which Japan would face crises.

One is Israel bombing Iran, forcing Iran to shut down the Strait of Hormuz, triggering an energy crisis in Japan, which relies on more than 80 percent of its oil from the Middle East being transported via the strait.

Another crisis would erupt if the Self-Defense Forces accidently shot down a Chinese fighter over the Senkaku Islands, prompting China to take retaliatory action and occupy one of the islets while, to Japan’s shock, Washington is reluctant to engage in direct conflict with China.

These extreme scenarios, which are possible but not probable, emphasizes how difficult it may be for Japan to change.

“Without a crisis, Japan may not be able to change,” he said.

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